Rental income “unequal treatment” by Internal Revenue Service contrary to EU regulations

The EU Court of Justice considered Thursday that the way the Belgian internal revenue administration calculates the taxes which the citizens renting their property have to pay is not right. For it calculates the tax differently, according to where the property is located.

If a Belgian citizen rents out a second home in Belgium for private use, the taxable base will be determined by that good’s cadastral revenue (index-linked). Now, if he rents out property in another EU country, the tax will be calculated on the basis of the real rental value of that good, which is generally much higher than the cadastral.

In its ruling, the EU Court of Justice considered that this difference contravenes EU regulations but did not provide Belgium with indications as to how to solve this problem.

The EU Commission had introduced an appeal against Belgium on that subject in March last year.